Question

Wholesale Hardware Consultants purchased a building for $615,000 and depreciated it on a straight-line basis over a 35-year period. The estimated residual value is $90,000. After using the building for 15 years, Wholesale realized that wear and tear on the building would wear it out before 35 years and that the estimated residual value should be $76,000. Starting with the 16th year, Wholesale began depreciating the building over a revised total life of 20 years using the new residual value. Journalize depreciation expense on the building for years 15 and 16. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing the depreciation on the building for year 15. Date Accounts and Explanation Credit Now, journalize the depreciation on the building for year 16. Date Accounts and Explanation Debit Credit

Answer 1

a) Depreciation expense

Date	account and explanation	Debit	Credit
	Depreciation expense (615000-90000/35)	15000
	Accumulated depreciation-Building		15000
	(To record Depreciation)

b) revised depreciation = (615000-15000*15-76000)/5 = 62800

Date	account and explanation	Debit	Credit
	Depreciation expense	62800
	Accumulated depreciation-Building		62800
	(To record Depreciation)